Hungary says EU authorised its nuclear fuel supply deal with Russia

Hungary said on Wednesday (25 March) that it has reached a compromise with EU nuclear body Euratom over plans for Russia to be the sole supplier of nuclear fuel to the country’s Paks power plant.

Under the new deal, Russia would be able to supply fuel for two new reactors at the plant in central Hungary over a ten year period.

“We have an agreement on what basis and in what form fuel supply is acceptable to all sides — Hungary, Euratom and Russia,” government spokesman Zoltan Kovacs told AFP.

The agreement still needs the approval of the European Commission, the EU’s executive arm, and Kovacs said a decision was expected within weeks.

The announcement came after Hungarian Prime Minister Viktor Orbán’s chief of staff Janos Lazar held talks on the issue in Brussels on Monday with EU Climate and Energy Commissioner Miguel Arias Cañete.

Hungary signed an agreement with Russia’s Rosatom last year to expand its sole nuclear plant with two power blocks of 1,200 megawatts financed with a €10 billion loan from Moscow.

Under the original agreement, Russia would have supplied fuel for the new reactors for 20 years.

The Euratom watchdog had raised concerns over Russia being the sole supplier, and asked others to be allowed to make deliveries in the future.

The European Commission is also looking into whether the Paks project meets European Union rules on state aid and procurement.

Kovacs said “talks are ongoing” with Brussels on these issues.

Last year’s Paks deal was seen as a sign of increasingly close ties between Orbán and the Kremlin, and has sparked concerns in the EU at a time when the bloc’s relations with Russia are strained over the Ukraine conflict.

Background

In early 2014, Hungary and Russia signed a cooperation agreement which included the construction of two new VVER reactors of up to 1200 MWe each at Paks.

The first new unit is to be commissioned in 2023, with the second following about two years later.

During Putin's visit to Hungary last February, Russia's Rosatom and Hungary's Ministry of Human Capacities signed a memorandum of understanding on cooperation in the training of nuclear energy personnel.

The Paks extension project is expected to cost nearly €12 billion, according to Portfolio.hu, an economic news website. Of that, 80% will be provided by Russia in the form of a "highly preferential" thirty year loan.

Hungary is heavily reliant on Russian gas and Orbán welcomed Russian President Vladimir Putin to Budapest in February to agree a continued supply - a visit controversial to the West, as it came amid conflict between Kyiv, and pro-Russian rebels in Ukraine.